‘Zimbabwe has no capacity to build forex reserves’

John Mangudya

Zimbabwe is living from hand to mouth and has no capacity to build foreign currency reserves from export earnings, Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya has said.


Central bank governor John Mangudya presents the Monetary Policy Statement at the Reserve Bank of Zimbabwe yesterday

Mangudya last week said foreign currency earnings were being spent on pressing commitments such as payment for the importation of fuel and electricity.

“Unfortunately we are living from hand to mouth now, for us to build reserves when we don’t have fuel, electricity, it does not work. I have heard ministers talking about these things, but you will be saying you are holding things constant ceteris paribus.

There is no time for ceteris paribus if I hold gold yet we don’t have fuel and electricity, then I go to the President saying I was building reserves, he will ask, are you mad?”

Mangudya said South African power utility company, Eskom was threatening to switch off electricity if Zimbabwe does not pay its debt by the end of the month.

“Right now, Eskom is saying if you don’t pay this amount of money by end of September, we switch off electricity. It will mean no production,” he said.

The central bank chief said the country needs to build confidence to be entrusted for funding by multilateral institutions.

“What we need in Zimbabwe, first and foremost let’s deal, with confidence-building measures then when that happens we go outside the country and leverage on your minerals underground and get $10 billion and $20 billion outside.”

“When an investor knows that Zimbabwe is going to continuously produce gold, platinum over a long time they are going to give money upfront.”

Mangudya said there was need for structural and fiscal reforms to enable the country to build the reserves.

“So we, therefore, have to work on structural, fiscal reforms to ensure that we are a matured economy. So we are looking at maturity. You can’t expect a kid born yesterday to start walking today,” he said. – NewsDay